LCCC approves bond sale, residents voice concerns

An aerial photo taken by a drone of Lewis and Clark Community College’s Godfrey campus.

An aerial photo taken by a drone of Lewis and Clark Community College’s Godfrey campus.

Image
1of/1

Caption

Close

Image 1 of 1

An aerial photo taken by a drone of Lewis and Clark Community College’s Godfrey campus.

An aerial photo taken by a drone of Lewis and Clark Community College’s Godfrey campus.

LCCC approves bond sale, residents voice concerns

1 / 1

Back to Gallery

GODFREY — Lewis and Clark Community College trustees approved the sale of $8 million in bonds, a move two area residents and a trustee questioned at a board meeting Tuesday night.

College President Dale Chapman said the sale will improve cash flow during an ongoing state budget crisis that has shorted the school by more than $6 million in general funds since July.

A stop-gap funding bill the Illinois legislature passed last month for public colleges and universities released about a month’s worth of funding for the Godfrey-based school, Chapman said, but it is far from a long-term solution for the upcoming fiscal year, which begins July 1.

“It’s a dribble of funding,” Chapman said.

The bonds, known as “general obligation working cash fund” bonds, will be used to pay for day-to-day expenses like payroll until revenue comes in from tuition, taxes or the state, Chapman said.

Trustee George Milnor was the only board member to abstain from voting. All six other board members voted in favor of the bond sale.

Milnor said he chose to abstain because he doesn’t know exactly how the budget impasse will affect the college in the future.

“On the one hand I certainly understand the state’s situation, which is very unfortunate and is due to a history of fiscal mismanagement,” Milnor said. “We’re paying the price for that now. I fully support and understand the need for cash flow. Unfortunately it’s the situation that we’re in. On the other hand, I think we need to understand the implications of the fiscal situation of the college going forward.”

After a meeting with representatives from ratings company Standard and Poor’s, the college was re-accredited with “AA” status, though analysts said the college’s financial future is a concern because of the budget impasse.

“Although the district has very strong liquidity in the working cash fund, the imbalanced operations due to the budget impasse might cause significant financial pressure in the current years and following years,” a report from analysts said.

Two residents from the college’s district questioned the bond sale during public comment.

Mark Rabe, a resident of Edwardsville, said he believed the increased tax burden would be “a bit too much” for the taxpayers. Justin Zimmerman, also a resident of Edwardsville, questioned the college’s expenditures on the Mannie Jackson Center for the Humanities.

The college paid for the former schoolhouse’s renovation with $4.8 million in Life Safety bonds, though the property was donated by philanthropist Mannie Jackson.

“I think the development of that property by Mr. Jackson himself with private funds, as a private developer is an excellent boon to that part of Edwardsville. However, I am totally against any taxpayer funds being used on that, especially with the financial circumstances this institution is in,” Zimmerman said. “I don’t see any reason why something so removed and distant from the core mission and competencies of this institution, whether it be preparing people to go into the workforce, or four-year institutions, why that is necessary.”

The college president has said comparing the working cash bond sale to the renovation of the humanities center is like comparing “apples and oranges” because the bonds can only be used for day-to-day expenses, not for renovating buildings.

The bonds are set to expire in 10 years. Until then, the college would make payments on the bonds through an increase in property taxes on the district, which includes Madison, Jersey, Macoupin, Calhoun, Morgan, Scott and Greene counties.

The last time the college sold working cash bonds was when it was founded in 1970. Since then, about $5 million in interest accrued as a working cash fund. That $5 million will be used to balance this fiscal year’s budget, Chapman said.

If the state releases funding, the college may not have to spend the working cash interest. But even if the state pays its debt, the funds will be held as a reserve, Chapman said.

The district’s debt burden is “moderate” at 3.6 percent of market value, according to Standard and Poor’s analysis. The ratings company considers the district’s debt burden per capita of $1,839 low, however.

The property tax increase would amount to roughly $11 per year based on $100,000 in property tax value, according to the college president. Interest rate on the bonds would be in the range of 2 percent, based on similar issues from other AA-rated bodies, though the actual interest rate has not yet been determined, said Vice President of Finance Mary Schulte. The first payment will be due on Nov. 1.